Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

Punishing Free-Riders: How Group Size Affects Mutual Monitoring and the Provision of Public Goods

Abstract: Because costly punishment is not credible, subgame perfection suggests that punishment will not deter free riding, regardless of the size or structure of groups. However, experiments show that people will punish free riders, even at considerable cost. To examine the implications of agents who punish, we simulate an environment populated with behavioral strategies seen in the lab and use the simulation to develop hypotheses about why group size should matter when punishment is allowed. We test these hypotheses experimentally and examine whether the effect of group size is purely due to the number of group members or if information about other group members is what is important. We find that large groups contribute at rates no lower than small groups because punishment does not fall appreciably in large groups. However, hindrances to monitoring do reduce the provision of the public good.

Do Enclaves Matter in Immigrant Adjustment

Abstract: This paper is concerned with the determinants and consequences of immigrant/linguistic concentrations (enclaves). The reasons for the formation of these concentrations are discussed. Hypotheses are developed regarding "ethnic goods" and the effect of concentrations on the immigrant's language skills, as well as the effects on immigrant earnings of destination language skills and the linguistic concentration. These hypotheses are tested using PUMS data from the 1990 U.S. Census on adult male immigrants from non-English speaking countries. Linguistic concentrations reduce the immigrant's own English language skills. Moreover, immigrant's earnings are lower the lower their English-language proficiency and the greater the linguistic concentration in their origin language of the area in which they live. The adverse effects on earnings of poor destination language skills and of immigrant concentrations exist independently of each other.

Learning in Cournot Oligopoly: An Experiment

Abstract: This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful behavior if they have the necessary information; and if they imitate, markets are more competitive. Other subjects follow a best reply process. On the aggregate level we find that more information about demand and cost conditions yields less competitive behavior, while more information about the quantities and profits of other firms yields more competitive behavior.

The career costs of children

Abstract: This paper analyzes the life-cycle career costs associated with child rearing and decomposes their eects into unearned wages (as women drop out of the labor market), loss of human capital, and selection into more child-friendly occupations. We estimate a dynamic life-cycle model of fertility, occupational choice, and labor supply using detailed survey and administrative data for Germany for numerous birth cohorts across dierent regions. We use this model to analyze both the male-female wage gap as it evolves from labor market entry onward and the eect of pro-fertility policies. We show that a substantial portion of the gender wage gap is explainable by realized and expected fertility and that the long-run eect of policies encouraging fertility are considerably lower than the short-run eects typically estimated in the literature.

Earnings Functions and Rates of Return

Abstract: The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This article considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes, and nonlinearities in the earnings‐schooling‐experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than to graduating from college, although both have been increasing over time.